Adventures in technology: use cases in financial services

If in Part 1 of our event wrap-up, Digital banking is only 1 percent on its way, we focused on the main fintech and open banking discussions during the event, now it’s time we take a deeper view into the future of digital payments.

As many of us predicted, the machines are definitely coming. Artificial intelligence (AI) was on every Money 20/20 event attendant’s lips, and the stands that offered Virtual Reality (VR) payment experiences, roboadvisors, or chatbots interactions were the most visited. Nevertheless, there are different opinions on the best use case. For us, the most interesting ones are the live analysis of customer/purchase data to tailor offers and loyalty and back-end fraud management.

Next gen retail and commerce

“Frictionless”, “instant”, “invisible payment”, “the payment disappears”, are all phrases and buzzwords we constantly hear in payment industry. New applications of AI, conversational user interfaces, and other emerging technologies are starting to be applied to create a truly client centric experience, driving a shift away from traditional commerce.

At Money 20/20 event we had the privilege to take a glimpse into Wirecard’s Omnichannel ePOS Suite and talked to Markus Eichinger, EVP Global Product Strategy at Wirecard, who explained how merchants can increase their metrics in important performance areas by using data evaluations and analyses.

As a result, “AI and extended Data Analytics will become a key upcoming trend that plays a crucial role in the future of payments” Markus said. “Only by intelligently interpreting the data streams for cashless payment transactions, big data will turn into smart data. This not only provides retailers with invaluable insights of their customers’ needs and preferences but also helps them improve targeted offers and reduce churn rates”

Not only AI, but biometrics as well are going to shape up the future of “invisible payments”. Even if biometrics used to be a sensitive thing, now it has gone mainstream, due to the use of Touch ID on iPhone and iPad. During the event, we met with Nick Dryden, CEO of Sthaler, a UK-based biometrics payments startup, the founder of Fingopay, who shortly presented us how you can pay just by using your fingers.

One year after being bought by its global parent Visa Inc., Visa’s European region is making big changes and striking up new, strategic partnerships that are helping to accelerate ecommerce across Europe. During Money20/20, the global card network has announced investing an undisclosed amount in Klarna, sharing “a vision for how today’s online and mobile commerce experiences can be as simple as they are in the real world,” as Jim McCarthy, Executive VP, Innovation and Strategic Partnerships, Visa, stressed out.

As we have seen emerging technologies boost the retail landscape transformation and expectations of the in-store experience changing, retailers are encouraged to see mobile payments and digital wallets as an opportunity.

Do customers care about mobile wallets?

Mobile wallets in mature markets have been tried and tested with few success stories and they are not where we wanted or expected them to be. In addition, best practices are rarely transferable across geographies and even if adoption of the ‘Pays’ is happening, it is painfully slow. A key issue is the lack of relevant functionality, and the narrow focus on some payment features, which are not a priority for most customers. Rewards, in-app and online payments, offers, transaction notifications; these are the things that will change consumers’ habits and we will see a lot more of them on offer.

We have watched Angela Lamont, the event’s presenter, coming up on the stage with tons of credit cards, loyalty cards, her wallet, and mobile phone and asked ourselves what needs to change to make mobile wallets a real challenger for driving new types of value exchange, and not just seen as an attempt of replacing physical wallets.

The wallet is no longer a simple storage for payments, but can become a place where you store your identity as well. Because identity is value when it comes to transactions. As a result, “digital identity was already conditional for doing payment, but is moving into the conditional infrastructure needed in blockchain projects and IoT applications. Identity is about the origination of data and things” Douwe Lycklama, Founding Partner at Innopay, told us; “and this topic – digital identity - is going to top the 2018 conference’s agenda”, he concluded.

Fraud detection and prevention in commerce

The ubiquity of mobile devices and the ecommerce market’s tremendous growth are fundamentally changing the way that consumers pay. Nevertheless, a key hurdle in this transformation is the issue of trust in online transactions. Not only is the ecosystem bearing huge cost from fraud and bad actors, but also consumer trust is increasingly damaged because of security and privacy breaches.

Alarmingly is the fact that fraudsters can break even through merchants’ rule-based fraud prevention systems and order goods on the victim’s account, according to Cristina Soviany, Founder of the machine learning fraud startup Feature Analytics.

“Ecommerce protections must include either machine learning or artificial intelligence algorithms than can be more easily adopted to changing forms of fraud over time and by industry”. Furthermore, “decline and acceptance rules shouldn’t be abandoned entirely but should be kept relatively basic and static while another layer machine learning algorithms can be altered rapidly to deal with changing fraud trends visible in the merchants’ transaction data” she concludes.

Therefore, continuous fraud monitoring, machine learning solutions, and biometric authentication, are allowing the introduction of new risk based authentication models to streamline the checkout process and reduce basket abonnement.

So far, we have mentioned only a part of the topics and business partners with whom we met at Money 20/20, but they were many more and we want to thank them for making time to meeting up with us and share such wonderful ideas. As final remark, we will conclude by using Sophie Wawro’s, the event director, quote:

The time for hiding in the shadow of legacy technology is over; join the revolution and wear your cape with pride!

About the author:

Mirela Ciobanu is Senior Editor at The Paypers and has been actively involved in covering digital payments - related topics, especially in the cryptocurrency, online security and fraud prevention space. She is passionate about finding the latest news on data breaches, machine learning, digital identity, blockchain, and she is an active advocate of the need to keep our online data/presence protected. Mirela has a bachelor degree in English language and holds a Master in Marketing.